A recent buyer asked us at signing (a day or two prior to closing):
“I’ve noticed that the fees charged by my loan officer are about $1,600 more than my Good Faith Estimate. I recall only being charged 1% loan origination. Is there any explanation for this?”
What are the re-disclosure laws (both state and/or Federal)? Obviously, this buyer was a bit under pressure and did not want to create waves to delay the purchase.
Being in the escrow business is really fascinating. You see lots of things. You hear lots of things. You get to observe what is efficient and what slows down transactions.
Escrow can be confusing too. We really serve two masters: those that are our clients (the principals such as the seller or buyer or borrower) and those that are our customers: agents and loan officers who suggest and refer work to us or any other service provider. It’s also something to experience such a large transaction “quality control” chasm between different agents working for different brokerages even within a major brokerage franchise network.
But this post really is about how agents and consumers decide what you decide.
1) For example, an interesting thing occured. In the mail, I received a post card from Greg Perry of John L Scott marketing a home not far from my place. It’s not strange that I receive things in the mail from Realtors, but that the owner of the home is a broker from another company—why did they hire another agent to list the house? I know this owner because our kids play together and we’ve closed transactions for him. It is a fascinating move.
2) We have had several transactions with repeat clients who have used a different service provider (agent or loan officer) the second or third time around. Why are they doing this?
3) In escrow we work in high collaboration with just about every title company. Obviously, we do not have primary contact with the sales staff (title reps) but rather the attorneys, title officers and back office staff that are largely the engine under the title insurance hood.
One of the things that I have always wondered and one question that my wife actually raised while we discussed business matters is the following: how do agents choose one title company over another since the perception of agents in the market is that title insurance companies (heck, even escrow firms) all do the same thing and the end result of issuing a title policy or a closed transaction is the same result? In other words, agents have a tendency to say they receive good service, but what is that service they receive? Agents have very little if no contact with the title company other than the with the title rep. How are the title companies differentiating themselves especially when many are using just another name plate but are in fact a subsidiary of a large national title company.
Consumers have no idea how to differentiate Pacific Northwest Title (First American) from First American Title. Or, comparing Land America Title from Commonwealth or Rainier Title (Land America companies). It is kind of like comparing the Nissan Quest with the Mercury Villager. Both are virtually the same vehicle. Consumers rely upon their agent to differentiate for them. How do the agents differentiate between service providers for their customer?
4) Along those same lines, competition is cut-throat between service providers such as escrow and title, especially in a market where sales volumes are significantly lower than over the past four years. Agents are very fierce in fighting for their respetive loan officer or title or escrow company if involved in a sale. Tradition has it’s place, but what is the compelling proposition of one service provider or closing agent over another?
5) What is more important to an agent when suggesting a loan officer: closing the transaction, lowest rates and fees for their customer or client, or a combination? For example, one of the loan officers we work with does average volume but gives phenominal service to the client, loan docs are usually ready days in advance and nothing has ever not closed due to a problem created by this LO. On the other hand, we work with LO’s that due boat loads of loans and there are the occasional problems with service to their clients or other issues.
There is only so much escrow can do when escrow receives loan docs at 5pm and the borrower must sign because an interest rate lock is about to expire and the rescission period puts their back against the wall, forcing them to sign the very same day (evening). Then the borrower (s), strangely unaware of the urgency, indicates:
1. Can you come to our house between 7:00-7:30 because American Idol is on at 8pm (like tonight, cough-cough) and we can’t miss it. Or, how about after the program is over?
or,
2. I drop Billy off at Basketball at 6:30 and pick him up at 7:30, so I won’t be home until 8:15 pm. Will 8:30 pm work for you? Oh, my spouse needs to sign as well? He does not get off his shift until midnight. Is that a problem?
Will these transactions close on time? If you do what Ardell suggests in Step #2, it is a sure thing..
I’m beginning to muster up the courage to ask management for new business hours: M-F 8-5pm; quick hour break for a run to Panda Express, sprint any last minute disbursed loan Payoff’s to the UPS terminal blocks from our office to make it on an airplane to wherever, do banking before the bank closes at 6pm; hustle back to the office, quickly re-check e-mail for more “last minute” loan docs promised days earlier, and then re-open from 6pm until midnight for signings from Bellingham to Olympia to Ephrata. Sat. and Sun. leave wide open for signings too.
How do you value views? I don’t know.
Growing up on Capitol Hill is a far cry from acreage, cows, chickens, Llamas and horses. To say my current environment is different from where I grew up is an understatement. The house I grew up in had what I thought was an excellent view looking East over the Arboretum, Madison Park, Lake Washington and the Cascades. I can recall many warm Summers climbing out of my parents bedroom window and inching up the roof on my rear to get a perfect view. Only on the roof ridge could I see Mt. Rainier and Mt. Baker, but they were there. Husky Stadium—the hollowed place my Kansas State University Football ulumnus father (played with the late Harold Robinson, the first African American player in the Big 8 at the time, circa 1952) hated with a passion I can’t describe—was also in view. I don’t know how a guy could hate the Huskies so much and get his Engineering/Architecture degree there, but I just didn’t ask questions. I crawled up on the roof really to see one thing only: The Blue Angels.
When my spouse and I started looking for a larger place for our clan, we couldn’t qualify for squat (code for beer budget with a Champagne taste). I wanted a view, she wanted acreage. Where in Ballard were we going to find that? Where in Edmonds would we find anything like that without a million dollars in my back pocket. Monopoly money didn’t count. Snohomish County is where we found the view and acreage.
Ardell has had some really nice view photos lately on this blog and ActiveRain Blog. Rhonda Porter has posted some great photos of views and water on her blog as well. It reminded me about a post I wanted to make about how to value view property. Since I’m not in the valuation business, I thought I’d ask those who are. How do you value view property?
Man convicted as being a key player of “swindling” $50 Million likely to begin serving 15 yrs. in prison and reportedly has been selling “reverse mortgages” to senior citizens while waiting for date to report to prison.
Evidently, The Washington State Dept. of Financial Institutions (DFI) denied his loan originator license on Dec. 17th of last year. DFI get’s it right, but it still begs the question: How did this fellow get through internal controls at the company he last worked for? Sloppy at best.
Bill Morlin reports from the SpokesmanReview.com:
“Michael Duane Smith has worked as a “reverse mortgage planner
It was reported by the Miami Herald that a local Realtor blogger is being sued by a developer who is not pleased that the blogger, Lucas Lachuga, remarked that the development was “doomed” on a January 10th post.
”Like any other blog out there, it’s a collection of my unbiased opinions and thoughts,” he said. “I have buyers all over the world who go to my blog. They know I’m not going to sugarcoat the market.”
Realtor Lucas Lachuga’s Blog is called Miami Condo Investments.
This is the kind of case attorneys probably would watch very closely.
First, I don’t know about other’s experiences in blogging, but stumbling upon Rain City Guide over a year ago or so and Dustin’s introduction to me of the world of moving away from a static glorified business card (called a website) to that of the dynamic and interactive world of Blogging has had a tremendous impact on me and as a small business owner (like everyone here).
For example, I’ve been able to make contacts with people whom I would never have had the chance to without the platform of blogging, both personal contacts and business contacts. Today, I got a chance to head back to my old stomping grounds in Seattle due to a courtesy signing with a client who teaches at Seattle University. After finding a parking spot, I headed over to the campus and walked to the School of Engineering to meet for our appointment. After about 30 seconds, I realized I was talking to an old neighborhood acquaintance whom I have not seen for over 30 yrs!
Inspired, after the appointment, I drove up Madison St. towards 19th and headed North towards St. Joe’s School on 19th and Aloha where I went to school as a kid. On the Northwest corner of 19th & Aloha is a small building where I was given my first job as a skinny, messy 70’s style haired bloke. The impact of that first job is really what set the stage for the foundation of work ethic and character building.
My first job was given to me by the late George and Evelyn Benson of Benson’s Mission Pharmacy on Capitol Hill. For those unfamiliar, George Benson was a long time pillar of the Capitol Hill community and a respected Seattle City Councilman. You want to talk about customer service? I distinctly remember George pulling up in his car to hand deliver a prespcription for my mom or dad at our front door a few blocks away. Those were the days of intensely personalized service. Mission Pharmacy and the Benson’s are no longer, but the windows I washed and the sidewalk I swept are still there as they were 30 years ago.
I headed over to my old house where I grew up, drove around the front of the home, got out of my car and headed over to the steps and walkway that wind up to the front door, but I stopped short of that trek—memories just racing through my head. Walking back to my car, I then drove around to the alley, which really was “our” front door entrance. Peering through my passenger door window I stared up into my old bedroom window and into the back yard. I was too embarrassed to walk up and knock on the door. Perhaps another day.
Part of the motivation for telling you this is about finding out who you really work with and the idea of “trust.” Does it matter to you? Trust in real estate is the glue that keeps customers coming back to you. Trust to do the right thing. Trust to work in the best interest of our mutual client.
When you strip away all the marketing persona and fluff in our industry and get to know potential new clients in a transparent and personal way, giving a glimpse into what makes you tick, warts ‘n all, it is remarkable how quickly you forge trust in the person standing across from you. Finding a common denominator and building trust with a potential client on a level that has nothing to do with business has been exceptionally fruitful.
Since the beginning of this year, just days ago, through blogging, I have reunioned with two old childhood friends and received fruitful clients. When you strip it all away I’m not terribly different than any other agent or loan officer trying to make a living. On Thursday, I headed out to brokers opens to meet some new people in the business who work in our area and I bumped into an old “acquaintance” whom I met at college in 1985. I haven’t seen her for 21 yrs. The funny thing about the meeting was that she (the agent) mentioned to me “ya know, I just speak my mind, and I wanted to you to know that I had a crush on you way back when we were freshman.” What a Brokers open and what a week.
Dustin, although I’ve never met your family personally, thanks for introducing me to a way that a small fry can compete with the Goliath’s.
The intersection of ethics and real estate meet again
As if WaMu didn’t have enough on its public relations plate, CNN Money reports:
Jeniffer Wertz, who is seeking unspecified damages, says WaMu stopped accepting her appraisals in mid-2007 a month after she reported that her local housing market in California was “declining.”
Evidently, Wertz claims that Washington Mutual wanted her to change her forecast to “stable.”
And on the other side of the coin
Bloomberg reporting that inflated appraisals causing significant losses to lenders.
`You started to see more and more loan products that would keep payments low, and I see that as correlating with appraisal pressure because those products only work in a rising market.”
(and, which loan products might those be I wonder tongue in cheek?)
Former guest at Inman Connect, Jonathon Miller, a sought-after New York appraisal and real estate consultant remarked:
“Lenders and mortgage brokers routinely pressured appraisers to boost values, said Jonathan Miller, a New York property appraiser for more than two decades who writes a blog about the problem.”
And more from the Bloomberg article….First American and WaMu working together?
“In New York, Attorney General Andrew Cuomo subpoenaed Fannie Mae and Freddie Mac, the two biggest buyers of U.S. mortgages. He also sued First American Corp.’s eAppraiseIT LLC for allegedly caving to pressure from Washington Mutual Inc., its biggest customer and the largest U.S. thrift, to inflate values.”
Ethics in real estate: oxymoron?
Escrow is one of the toughest jobs in real estate, for a lot of different reasons. But, it is by far the most interesting from our experiences in that both Lynlee and I have sold (circa 1990) as licensee’s, bought and sold homes as homeowner’s and today as owners of an escrow company.
For example, in a recent day at the office we have had people curse at us, a customer who threatens to sue everyone in the deal including the clerk at the corner 7-11, an angry client yelling at their loan officer so loud that other tennants in our building start calling to see if everything is ok, then, before we have a chance to catch our breath, my wife comes smiling out of the signing room after meeting with a client. Looking at her, I say, “what are you grinning about?” To which she wryly remarks, “that customer just told me, ‘please don’t take me the wrong way, but you are a very pretty lady.”
You can be the scum of the earth to someone at 10am in the morning and then a hero just twenty minutes later.
In escrow you meet the most interesting people: From rock stars, to brain surgeons, shakers ‘n movers, CEO’s, farmers, war hero’s, teachers, politicians, pro-athletes and more. And, the occasional world famous writer to boot.
The Hope Now program currently being proposed in the other Washington is designed to assist current homeowners with Adjustable Rate Mortgages (ARM’s) in which their ARM’s may adjust upward causing financial hardship. An issue of immense concern is how do you sift through the thousands of homeowners and qualify those who’s mortgages are about to recast to some ugly interest rate? Further, how do all the stakeholders and investors of these mortgages see this playing out—that’s the part Attorneys will have to fight about (what say you Attorneys?).
If the Government players in this program, including one of the lead Conductor’s in this orchestra, Treasury Secretary Paulson, have their way, the investors of these loans will have to be a good sport and play along, never mind losing copious amounts of money, nor the other legal implications.
‘The modification of existing contracts, without the full and willing agreement of all parties to these contracts, risks significant erosion of 200 years of contract law,’ said Joshua Rosner, managing director at an independent research firm in New York.